powerpoint 3 - 4. Conceptual Framework Outline User...

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4. Conceptual Framework
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2 Outline User orientation, Objectives, Qualitative characteristics Elements of financial statements and recognition guidelines In-class question
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3 Usefulness of conceptual framework A conceptual framework is needed to: create standards that build on an established and consistent body of concepts and objectives provide a framework for solving new and emerging practical problems increase users’ understanding of and confidence in financial reporting enhance comparability among different companies’ financial statements
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4 The Conceptual Framework User Orientation Objectives Decision-maker’s - needs - characteristics - understandability Provide useful information - investment and credit decision - resource allocation decisions - assessing management stewardship Qualitative Characteristics Elements Primary qualities - understandability - relevance: predictive, feedback value, timeliness - reliability: verifiability, representational faithfulness, neutrality Secondary qualities - comparability - consistency Assets Liabilities Equity Investment by owners Distribution to owners Income Revenues Expenses Gains Loses Recognition and Measurement Guidelines Assumptions - economic entity, going concern, monetary unit, periodicity Principles - historical cost, revenue recognition, matching, full disclosure Constraints - cost-benefit, materiality, industry practice
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5 Qualitative Characteristics of Accounting Information Understandability Relevance (feedback value, predictive value and
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This note was uploaded on 05/06/2010 for the course COMM Comm 353 taught by Professor Zhang during the Spring '09 term at The University of British Columbia.

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powerpoint 3 - 4. Conceptual Framework Outline User...

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